Do you know your cashflow position for this month and what are your expenses?
Ladies, it’s two simple questions, but if you can’t come up with a rough answer off the top of your head, you’re making a rookie financial mistake: you’re not in control of your cash flow – and this can end up costing you dearly.
By getting on top of the boring day-to-day transactions that dictate your bank balance, you’ll find that your monthly budget will start to run itself, leaving you more time and money to spend on life’s fun stuff.
- Save money–by budgeting better and not slipping into the red, you’ll reduce bank and loan penalty payments and avoid higher interest rates. You’ll also save on your utilities, thanks to prompt-payment discounts.
- Save time– once your direct debits and automatic payments are set up, you’ll not have to spend time fiddling with paperwork or online banking each month.
- Save stress– it’s always darkest before the dawn, especially if you’re lying in bed unable to sleep, worrying about money. By knowing down to the last cent how much you have to spend each month, it will help you limit your spending to match your budget.
- Save for the future– a financial roadmap will help you better navigate a long-term savings plan.
Happy financial life, no strife
Your first step in managing your cash flow is to grab a pen and paper and write down what you have coming in every month, and what you need to pay out.
- Plan ahead– if possible, do a year’s plan, involving every essential utility and bill: rent/mortgage, water and electricity, rates, insurance, school fees, work-travel/car costs, etc.
- Use different online bank accounts – have one for your rent/mortgage, one for your bills, one for your savings and one for your everyday living expenses. Transfer the relevant funds from your salary every month into your different accounts.
- Set up direct debits– all your essential bills should be paid using automatic payments. Big bills, such as insurance, can be spread throughout the year, to ease the pain. Have your wages automatically transferred into your different bank accounts each month.
- Consolidate debts– if you’ve two or three smaller personal loans, talk to your trusted mortgageadviser about consolidating them onto your home loan. Bank mortgage rates are at historic lows, and are likely to remain that way for the foreseeable future. Not only will you streamline your monthly cash flow, you’ll save money, too.
By clearing the decks of all your essential bills each month, you’ll end up with a clear picture of what you have to spend on day-to-day living expenses, such as food, and the luxuries that make the daily grind a little less grinding: Netflix, lattes and the occasional mall-splurge on your plastic.
A fear of the financial future is really just a fear of the unknown. By defining your budget and getting to grips with your cashflow, you’ll have a clear vision of the future and be able to look forward to a brighter and more prosperous 2018.